AMD receives $622M investment from Abu Dhabi firm

Advanced Micro Devices Inc. said it has received a $622 million investment from a unit of Mubadala Development Co., an investment company based in Abu Dhabi, the capital of the United Arab Emirates.

Minus expenses reimbursed to the development company, AMD will receive $608 million, which the chip maker will use for research and development and to support its manufacturing operations.

Mubadala bought 49 million newly issued shares of AMD, although the investment does not put the development company on AMD’s board of directors, AMD said.Mubadala is owned by the Abu Dhabi government. Since the investment is not a controlling stake, the deal is not subject to review by the Committee on Foreign Investment in the U.S., according to AMD.

AMD, the perennial second-place chip vendor in the shadow of Intel, started making notable gains in the market in 2005 with the introduction of its first dual-core, 64-bit Opteron processors, which doubled the performance of single-core Opterons.

But Intel has battled back with its own lines of 64-bit and dual-core chips, putting pressure on AMD. In October, AMD reported a net loss of $396 million for the third quarter, compared with net income of $136 million a year earlier. It was the company’s fourth straight quarterly loss.

After the market close yesterday, AMD filed papers with the U.S. Securities and Exchange Commission to sell up to $700 million of its stock periodically.

“AMD’s competitive position in the processor market looks little improved as the company has only managed to launch lower clock speeds, which carry list prices in the lower price bands, on its new 65nm Barcelona server processors,” said Citi Investment Research in a research note. “In contrast, Intel launched a full slate of clock speeds and price points with its new 45nm Penryn server processor.”

Intel launched the Penryn line earlier this week.

Advanced Micro Devices Inc. is expected to launch the Spider platform, which combines the company’s next-generation quad-core processors, graphics cards and chip sets in one platform to deliver better graphics, performance-per-watt and improved high-definition video.

Targeted at gamers and multimedia enthusiasts, desktop PCs with the Spider platform include the quad-core Phenom processors and can hold multiple ATI graphics cards to give users the “ultimate visual experience,” according to AMD.

The quad-core Phenom processor, also expected to be launched on Monday, will provide the processing power for the platform, and will be initially available in speeds of 2.2 GHz and 2.3 GHz. Processor speeds will crank up to 2.4 GHz to 2.6 GHz in the first quarter of 2008, said Leslie Sobon, director of product marketing for desktop systems at AMD.

Phenom includes three shared caches to improve memory performance, an improvement from the two caches included in earlier AMD processors.

The chips, manufactured using the 65-nanometer process, have multiple power-efficiency features that set them apart from Intel’s latest Penryn processors, Sobon said. A hardware and software platform allows the processor to detect the application running and adjust power consumption accordingly, she said. For example, if a user is playing a game and then switches to running e-mail, the processor automatically adjusts to use less power. The processor also improves energy efficiency during idle time, she said.

The processors also have improved hyperthreading technology for better application performance, Sobon said.

AMD will ship the 2.2-GHz Phenom 9500 and 2.3-GHz 9600 processors for $251 and $283, respectively.

PCs based on the Spider platform will ship with the ATI Radeon HD 3850 and ATI Radeon HD 3870 graphics cards. The graphics cards support Microsoft’s DirectX 10.1 specification that enhances overall image quality on PCs. DirectX is the primary interface responsible for rendering multimedia, including game images and video, on Microsoft platforms. It also renders better high-definition video with support for the Unified Video Decoder, which results in better HD DVD and Blu-ray images.

Spider will support CrossfireX technology, which allows up to four graphics cards to work together to enhance graphics performance in a system. That allows scalability in graphics performance and saves users from investing in graphics chips in the future.

Computers with the Spider platform will start shipping on Monday and many vendors, including iBuypower, Falcon Northwest, Cyberpower and Velocity Micro, will offer PCs that use it.

By packaging a CPU and GPU under one platform, PCs will become more affordable for users, Sobon said. Users will be able to purchase components like graphics cards from other vendors, though it may cost a bit more, Sobon said.

Spider is the first fruit of AMD’s acquisition of ATI Technologies Inc., Sobon said. After acquiring ATI last year for $5.4 billion, AMD said it would work on a chip code-named Fusion, which integrates a GPU and CPU on a single die. Fusion is expected to be delivered by late 2008 or early 2009.

However, since the acquisition, AMD has struggled, losing market share to Intel Corp. and recording four straight quarterly losses weighed down under costs related to the ATI acquisition.

While Spider doesn’t combine a GPU and CPU on a single die, it is an incremental step toward reaching Fusion, said Jon Peddie, president of Jon Peddie Research.

Both Intel and Via have failed at delivering a combined graphics processor and CPU platform, with Intel killing its Timna project in 2000, and Via failing with its Matthew microprocessor project.

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Jim Love, Chief Content Officer, IT World Canada

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